The Real Estate Consumer’s Bill of Rights

Redfin launched the real estate consumer’s bill of rights today, which Inman News is blasting out to its hundreds of thousands of real estate subscribers some time this morning. The premise of the bill is that consumers should have all the information the agent does about a house they’re trying to buy or sell, and about how the whole process works. Nearly a dozen Redfinners worked on it, from real estate operations, engineering and marketing.

Now we’re trying to recruit other brokers and real estate bigshots to support this idea. So consumers can get in on the act, we’ve also started a petition that we plan to send to the National Association of Realtors and to all the local MLSs to which we belong; we hope you’ll sign it.

Maybe this can become a movement. Maybe real estate really can get better. The last time I circulated a petition, it was to get my beautiful but cruel high school French teacher fired, which involved premature exposure, humiliation, a year of intricate recriminations, and a very poor participation grade. Read the rights, and let us know if you think this stands a better chance.

  1. Choose the services you pay for: Laws in more than a dozen states forbid brokers from refunding commissions to you, or require brokers to provide services you may not want to pay for. These laws protect the industry, not the consumer.
  2. Know how your agent makes his money: In real estate, the seller pays both his own agent and the buyer’s agent a percentage of the sale; the agent earns more when his client pays more. If a house seems difficult to sell, the seller may even offer buyers’ agents an especially high percentage. Buyers’ agents should be required to explain to their clients how they are paid.
  3. Know when you are committed to an agent: Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself. The relationship between an agent and a consumer should always be explicit, so that both parties know when they’re committed to one another.
  4. Know what services your agent will provide: Much of the work of a buyer’s agent begins after the buyer has agreed to buy a house. This work includes coordinating inspections, repairs, mortgages, title reviews and escrow services. But agents today are paid only to bring a buyer to a transaction. Once that happens, it is virtually impossible to fire your agent. In most cases, this is appropriate, as the agent who puts a deal together deserves the commission. But in becoming committed to an agent, you should know what services the agent will provide as part of that commitment and what recourse you have if the agent doesn’t perform those services. An open agreement between you and the agent protects the agent from being unfairly dismissed, and ensures you get the service you expect through closing.
  5. Have an agent that represents only your interests: Most states allow real estate agents to represent the buyer and seller in one transaction, and get both sides of a commission. As a result, some sellers’ agents are on the prowl for unrepresented buyers to bring to the seller. It’s a solicitation neither side can easily refuse because the seller wants the buyer and the buyer wants the house. But an agent can’t fairly represent the interests of two parties to the same transaction. An agent should represent only one party, and take commissions for only one party.
  6. Know the commission refund you can get before you buy a house: Depending on the service provided by the buyer’s agent, some sellers vary the commission offered to buyers’ agents. This flexibility is good in theory, but in practice it’s often used to thwart commission refunds: buyers expecting a refund of $10,000 or more from their agent discover on making an offer that the amount has been radically reduced in favor of the seller’s agent. Buyers should know in advance what circumstances let the seller’s agent keep more of a commission for himself. It’s fine to change the price but not at the cash register.
  7. See all the houses for sale: Many of the multiple listing services set up to share listings between brokerages forbid participating websites from displaying for-sale-by-owner houses alongside broker-listed houses. As a result, home buyers usually don’t see all the houses for sale, and home sellers have to hire brokers just to get their house on mainstream sites. MLSs should not require exclusive display of listings.
  8. Have an open discussion about a house for sale: On the web, you can openly discuss almost any product for sale except a house. That’s because sellers’ agents “own the listing,” controlling where and how it’s posted for their benefit. The rules of some MLSs discourage real estate websites from publishing independent reviews and preclude owners from distributing MLS marketing materials outside MLS-sanctioned websites. Once a house is for sale, everyone in the market should be able to discuss it.
  9. See all the information available about a house for sale: Many MLSs make it difficult for buyers to see recent past sales data, how long a house has been for sale, or whether its price has been reduced. Once a house is for sale, you should be able to see all the information available about it on your own, without becoming anyone’s client. The only exception to this rule is information whose publication jeopardizes the seller’s safety, such as when the presence of children precludes a showing.
  10. Be sure your agent will show your house to everyone: Some sellers’ agents selectively refuse to show houses to a buyer represented by an alternative brokerage, which hurts the seller and the buyer. If, as part of his service, a seller’s agent doesn’t show houses to all buyers, the seller should know it, and the buyer should be able to contact the seller directly. When agents don’t facilitate showing a house, they should at least stand aside and let buyers see the house on their own.

OK, now you can go hogwild with the comments…

Discussion

  • Jerry

    I predict most agents are going to hate this. Especially #10…

  • http://www.realestateabc.com Afthird

    While some of your suggestions are great, it’s too bad you guys didn’t seek a little input from those involved in real estate a bit longer. If you had, I bet these rights would have been at the top:

    1. Know how experienced your agent is. How many years have they been a real estate agent. How many homes did they personally transact last year. How about the year before and the year before that? In how many transactions were they representing the buyer and how many the seller?

    2. Know if your agent is a local market expert. How many homes have they personally sold in this neighborhood? How about this zip code? How far away do they live? How long have they lived in the area? Have they been around long enough to see the ups and downs of the real estate market? Is your agent involved in the local community?

    3. Know how much expert realty advice you will receive from your agent. Will they use their market knowledge to help you find the perfect home? Will they advise you on if a property is a good or bad investment? Will they tell you to avoid homes that are bad choices based on their experience? Will they personally be on the lookout for a home that meets your needs even before it comes on the market?

    I’d suggest folks looking for an agent read this:
    http://www.realestateabc.com/homeguide/choose.htm

  • http://www.redfin.com Glenn Kelman

    We have not seen consumers struggling to obtain this information, but we support any measure that helps consumers make an informed choice about the house they’re buying or the services they pay for.

    Most brokerage websites, including our own, display agents’ backgrounds. We also explain our agent hiring requirements, which include a minimum of 25 completed transactions.

  • http://www.realestateabc.com Afthird

    Glen,

    I see a widespread problem of agents representing themselves as having more expertise than they actually do.

    Consumers should know that they are taking the risk of a mistake costing tens of thousands of dollars without advice from an expert local agent.

    There are hundreds of neighborhoods in Seattle and there is no way any single agent can know more than a handful really well.

    Your eight agents in Seattle are spread too thin to offer any constructive advice to consumers… and Redfin only has five agents in all of California!

  • http://brickandgarden.com/blog Reuben Moore

    In regard to the intersection of Number 1 and Number 10, I have a question: If the seller’s agent does not show the property AND the buyer’s agent does not show the property, why should the seller have to pay for this?

  • Nick Davis

    Redfin is saving the consumer a lot of money with these rebates. A co-op fee is offer to any broker working with the buyer. If Redfin or any other broker wants to reduce their commission to the buyer, then that is their right. No third party to the transaction should have any say in the matter.

  • EconE

    The Industry is writing it’s own bill of rights?

    for the consumer?

    Fox guarding the hen house.

  • http://replus.ca/blog/ Fraser Beach

    I think the restrictive practices of real estate associations are in real trouble.

  • http://myblog.daltonsazhomes.com Jonathan Dalton

    The industry isn’t doing this, EconE. Redfin is.

    There’s a difference.

    • http://www.newhomesteps.com New home building guru

      You're exactly right . Good point.

  • http://www.activerain.com/jemarti jemarti

    Afthird – you seem to forget that you were once NEW too and not all Rookies are idiots! Many new agents have more respect for the code of ethics than many old-timers (and I know that because I’ve heard them talking). Experience and time in the career does not necessarily mean you CARE about the client you are helping. It just means you know the ins and outs that ALL rookies will learn. BUT – Rookies are not tainted by the industry and will walk a much straighter line than someone who knows how to work the system!

  • http://www.activerain.com/jemarti jemarti

    #3: Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself.

    That is not true – you don’t officially or legally represent anyone without a signed representation form. I’ve shown properties (and did not ask anyone to sign anything) and so they were free to go to anyone they want to. Without that signed document – there is no agency!

  • http://www.activerain.com/jemarti jemarti

    5. Have an agent that represents only your interests: Most states allow an agent to represent the buyer and seller in one transaction, and get both sides of a commission.

    False again – No Agent or Broker for that matter can represent both sides WITHOUT full disclosure and written consent from BOTH sides! If either the buyer or seller says No to dual agency then it’s a No-Go!

    From what I see you guys are only mentioning bits ‘n pieces of a much larger puzzle. If you’re going to build the puzzle – build it right and with ALL the pieces!

  • http://www.activerain.com/jemarti jemarti

    10. Be sure your agent will show your house to everyone: Some sellers’ agents selectively refuse to show houses to a buyer represented by an alternative brokerage, which hurts the seller and the buyer.

    I’ve actually heard this entire scenario play out in the agency I LEFT in December and that was one of the biggest reasons. All they had to do was refer the client TO the office that refused to pay a commission.

    In my neck of the woods there are many agencies who do NOT post their listings on the MLS and it’s known around the other agencies that they won’t pay a referral commission if anyone brings a buyer.

    What matters to me is if the client likes that house it is my job to get him/her in it with or without a commission. I truly believe that you should do unto others as you would have them do unto you and what comes around goes around@

    I wish all agents felt that way but we all know that all agents were not created the same!

    That – you failed to mention in your list!

  • http://www.davidlosh.com David Losh

    None of the Rights your spouting makes any sense for any one but your company. You have engaged other bloggers with this nonsense. This is another cheap marketing ploy to generate some interest in your eight million dollars, four of which you have spent on startup costs.
    It’s a drain of resources to have office staff engaged in Real Estate transactions. The sad part is that the consumers are being hurt. Your refunds are a payment for a lack of service. That’s not fair.

  • dwooff

    Real estate practitioners are at the crossroads on how a fee is earned. Is it by work, show, and procure or is it by having an agency contract signed and rebate commissions. Though many would kill procuring cause, it is the corner stone for earning fees. You can not blame anyone for wanting fees and not having to work but in the end, the public and professionals decide do they want working agents or fee participants.

  • http://www.GuldiRealEstate.com Chris Guldi

    Interesting idea, but too obviously a marketing ploy.

    I can’t speak for other states, but in Maryland some of these things are the law. Some of them are just good business practice. Number 6 is just silly… unless you want the whole industry to adopt your business model. Of course that would be bad for you because your volume would go away, and you would have no profit without a huge volume.

  • Nick Davis

    It’s time for Ralph Roberts to chime in and tell everyone how the Redfin rebate is illegal. The establishment is grasping at straws to stifle real estate rebates to consumers.

  • http://brickandgarden.com/blog Reuben Moore

    Look, the commission paid to the buyer’s agent (most often, by the seller via the listing agent) is to compensate the buyer’s agent for certain services in the transaction. Yes, client procurement is one of these services. But, only one. Now, the buyer’s agent does not work for the seller and he or she can choose whatever they wish to do, or not do, in conjunction with their client, the buyer. However, no one should expect the seller to pay for services that are not rendered.

    The fact that a buyer’s agent “rebates” part of this commission to the buyer is beside the point. If the commission is unearned, it should not be paid. We should all remember that the seller is entitled to as much “consumer protection” as the buyer.

    At our firm, as listing agents, we charge the seller a set commission. Then, we vary the total commission paid by the seller based on the services rendered by the buyer’s agent. This is absolutely in line with No. 1, above. Of course, it does not work out so well for No. 6. Change the price at the cash register? Well, let’s be up-front about it: We are only going to pay you for the services you “choose to provide.”

  • Aaron Peck

    What is SO wrong with current practices in our industry? Sure, there are a few bad apples in the bucket that get a lot of attention for poor or unethical practices – but in my experience this is a very small minority. Redfin seems to be trying to paint the industry in a light that will hopefully promote the limited-service, discount business model they have adopted. There is no doubt that the internet has become an integral part of the home buying and selling process, yet Redfin seems to want to reduce the role of Agents in addition to massively reducing fees. If you can’t articulate the services you provide then you don’t deserve to be paid for them. In a slower and more challenging market, this “ground-breaking” company Redfin will be out-of-business within 24 months or will adopt a more traditional brick-and-morter approach. The bottom-of-the-barrell clients will always be there and Redfin will happily serve their discounted, rebated, and frustrated needs. Instead of changing the way real estate is done, Redfin is choosing they type of client they want – the ones that truly professional, full-service brokerages run from. Redfin is another example of limited-service brokerages that actually hurt the reputation of Real Esate Professionals as a whole. You simply cannot provide a quality, high-level of service when you are compensated so poorly under the Redfin model – and it will negatively impact the consumers view of the real estate industry. Would you try to find the lowest cost, internet-based attorney to represent you in a $500K or $1M lawsuit?

  • james middlefield

    Isn’t it true that Real Estate Brokerage is a sales and marketing business. Sales and marketing people make their money from commissions earned. I know of no other sales profession where it is more clear what the sales agent is grossing and unclear what the agent is netting than the Real Estate business. When you buy an expensive car do you know what the salesman grosses? Does he give you enough service to earn that commission? What about sailboats, rv’s, heavy equipment? A house is a lot more personal to the buyer than some of these things but it is still bricks and mortar and land and there are plenty of ways to sell without using an agent. They just aren’t as efficient and safe. The Bill of Rigths already exists for savvy consumers who work with well respected professional agents. Your concepts often ignore the fact that it was the Realtors that built and paid for the MLS’s and cooperation between brokerages for smooth closings and sharing of commissions to encourage an efficient and safe market.

  • George Isaacs

    Most of your “bill of rights” address the “holes” in your business model, not true consumer rights as pointed out by Jemarti! This was not well thought out and points towards the glaring fact that Glenn and the Redfin gang that wrote it are grasping at straws (and are either obfuscating agency relationship law or completely ignorant of it) to meet their own skewed views!
    The more you put out in writing, the more we can all see that you are scratching for a workable business model. Maybe you should have titled it “Redfin’s wish list for profitability”!!

  • Nick Davis

    You mean to tell me that an agent can?t earn 5K (1%) on a $500,000 home and make a good living? The rebate model is geared toward savvy consumers who don?t waste agents? time. Thus, the rebate agents are more efficient and handle more transactions. Can you say ?E-Trade??

  • http://myblog.daltonsazhomes.com Jonathan Dalton

    No one here is trying to stifle the idea of a rebate, Nick.

    But are you going to tell me this – “6. Know the commission refund you can get before you buy a house” is not more than a little self-serving for Redfin?

    Getting the refund largely is dependent on using a brokerage with a rebate-based business model. So go ahead and use one! Nothing’s stopping you from doing it.

    Claiming some agents won’t allow their listings to be shown to someone who’s being represented by certain companies is little more than crying wolf.

    It wouldn’t be an issue if Redfin showed property versus encouraging buyers to lie to the listing agent about their representation.

  • http://www.my-currency.com/blogs/karim/ Karim Tahawi

    Glenn,
    You have it all wrong man. The thing is the “Anti-Consumer Bill of Rights”. Here is my first crack at it http://www.my-currency.com/blogs/karim/2007/04/03/anti-consumer-bill-of-rights/

    Kidding aside, nicely done!

  • Aaron Peck

    Nick,
    There are many Agents that can and do make a good living by making 1% on a transaction. Their focus is on quantity and volume, not quality. Have you ever sold a home that took 6 months to get into escrow, required a soils engineer and a structural engineer to evaluate the foundation and underlying soil, and required intricate negotiations about repairs and other costs? Those deals fall apart when dealing with a “rebate” or “discount” broker on either end.

    E-Trade? You can’t possibly draw a comparison between selling 1,000 shares of a $1.25 stock and selling the largest investment most people ever make, their home.

    The rebate model is not geared towards savvy consumers – but to the cheap nickel-and-dime consumers that protest to being over-charged 27 cents at the deli. When was the last time you saw a high-end property listed with Redfin or any other rebate broker? A sophisticated and savvy consumer understands the major potential pitfalls in any real estate transaction and confidently pays the true professional what they are worth.

    Karim,
    Thanks for the laugh on your anti-bill

  • Jerry

    The agents on this thread are really amusing. I’ve sold and bought a lot of houses over the years. During that time I’ve worked with at least a dozen agents. I have NEVER had one offer to reduce the commission because they didn’t do much to earn it. In my experience, the agent seems to view unearned commission as a windfall to him/herself.

    So, to all of you who claim that Redfin should provide a rebate because they don’t provide as many services as a traditional agent (BTW, I think they do provide as much or more service), I say “PUT UP OR SHUTUP!”.

    If you think that agents should be paid for only the service they provide, then move to that billing model. Let’s see some “a la carte” compensation for agents. How many of you have price lists for the various services you provide? Do I get a discount from the seller’s agent if I handle staging and put the sign in the yard? What about if I show my house, etc., etc.?

    You seem to forget that it is your unfair, anticompetitive business model that allowed Redfin to get into the business in the first place. So stop lying about your “fair to buyers & sellers” business model.

  • N Karris

    Real estate commissions are negotiable between seller/buyer and broker. Article 2 of the Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS(R) Effective January 1, 2007 states that REALTORS(R) shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Article 12 states REALTORS(R) shall be careful at all times to present a true picture in their advertising and representations to the public. Article 15 states REALTORS(R) shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices. Redfin may negotiate commissions with customers. Redfin may advertise their services. If a member of the NAR states Redfin is illegal they are making a misrepresentation, violated the Code of Ethics, and should be brought to the attention of the appropriate Board or Association of REALTORS(R). The United States of America has filed a civil antitrust suit against the NATIONAL ASSOCIATION OF REALTORS(R) in part because traditional brick-and-mortar brokers fear competitors like Redfin will effectively use Internet technology to attract more customers and provide better service at a lower cost. Consumers benefit from competition, even in the residential real estate industry.

  • mwcreel

    Redfin doesn’t care to show homes to clients; they pass that off to the listing agents. They seem to expect a full commission to be paid to them for merely guiding a buyer through the paperwork.

    The listing agent already bears the cost of marketing the home and holding open houses. Those fancy wooden signs aren’t free, nor are the lock boxes bought to place on each listing.

    Redfin seems to want half the money paid by the seller for doing 25% of the required work. I don’t see how you feel your making the Realty business better.

    Your a bit more like a parasite feeding off the Agents that are out there in the field everyday burning up gas at three bucks a gallon working for their keep.

    I’ve given many buyers rebates of up to 2% of the purchase price. The difference is, I’m there. I show it, I’m there for the inspection, I’m even at the closing.

    I do a bit more than push papers and answer questions. If Redfin wants a full commission paid so they can give a rebate, then get out of the office and earn your commission. Stop expecting the sellers agent to do your job on top of his so you can appear generous and rebate a portion of a commission you really didn’t earn in the first place. If your representing the buyer, get out of the chair and in the field to do your freakin job.

    Stop passing yourselves off as Saints looking out for the little guy. Your just trying to make an easy buck at the expense of others.

    Nothing new about that.

  • http://condodomain.com/blog Anthony Longo

    Glenn, go for it. You got our signature. We support the professional real estate community to its fullest…and we believe Redfin & its ‘alternative’ business model belongs under that umbrella! Great Bill, Great Post. Best of luck. (PS – when are you coming to Boston?)

  • Nick Davis

    I agree that redfin should do everything a full service buyer agent would do if they expect the full 3% co-op. I, too, give rebates and I work full service. redfin, or any other rebate company, can’t expect the listing agents to do everything if redin is getting paid the full 3%.

    However, I suppose the buyer could do his own leg work to earn 2% and then redfin can handle the paperwork, inspections & closing for 1%.

  • http://brickandgarden.com/blog Reuben Moore

    Nick – You have finally put your finger on what it is about the Redfin business model that makes people like me so frustrated. Redfin wants full-service payment for discount-plan service. What they do with the money afterwards (Rebate) has nothing to do with it.

  • mwcreel

    Add this to your listing agreements and MLS remarks and Redfin will have to do their job:

    Persuant to Rule 101f(1); Selling agent must show property, provide access and be present in entirety for the inspections, appraisals and any professionals providing service regarding the transaction for or on behalf of the buyers or Selling Office Commission shall be 1% of purchase price.

    Then there can be no claims of changing anything at the “cash register”.

  • http://www.redfin.com Cynthia

    Hi Anthony -
    Thanks for your support! Redfin is expanding to Boston very soon … we’ll keep you posted. Perhaps we can meet up when we’re in town? I’ll drop you a note.
    Regards,
    Cynthia

  • Nick Davis

    Mwcreel,

    Regarding this rule you have sited, is that a NAR rule? I think we have to look at Law, not what a industry trade organization has to say to protect their own interests.

    A buyer agent should be the introduction (procuring cause) to a property. It could be through the company?s website or from listings e-mailed to the client. — so long as the client let it be known that they are represented.

    Lastly, if you traditional agents are so concerned about redfin?s business model, then why don?t traditional listing agents rebate the 3% buyer?s agent fee back to the seller if a buyer agent isn?t involved in the transaction. Unfortunately, you guys just pocket that money and thus all credibility is lost. This isn?t about the a seller paying for an unnecessary expense, but rather how to keep all commissions within the industry.

  • mwcreel

    Mr. Davis,

    Your business model really means nothing to me whatsoever, your Agents lazy tactics do. As for self serving rules, your own Rule 10 is about as self serving as one can get. You’re implying that if an agent from another brokers isn’t willing to do your job for you they are cheating their client!

    You spew a lot of lies and misinformation in your bill of goods here. I personally do rebate 2% back to the client (same as you) if they use me as a dual agent. I don’t give 3% because I do have to do the work of two agents. Difference between you and me is I do the work! I’m right there standing next to them entire time, just as I am for the buyer. This works fine for most deals, obviously if it looks to be a bidding war situation I would recommend the client acquires another agent due to the conflict of interest. I only do dual agency with both sides agreeing to it and the price can be easily agreed upon by both parties. The buyer usually finds this attractive because they know that the large rebate I’m giving is likely covering most all closing cost and many times this is the deal maker for the seller.

    Nobody cares about your rebate system or that you list homes for next to nothing (oddly charging the same for a $140,000 condo as for a $800,000 home) insuring that you’re going to do little marketing.

    If you want to run your brokerage into the ground that’s your business and your right. Agents care that you’re LAZY! You expect 100% of the offered commission, but you don’t feel obligated to do your share of the work (in fact you feel we are obligated to do it for you); it’s really that simple. Do less than your fair share of work, and get less than full commission. You can use all the smoke and mirrors you want but that fact remains the same.

    You will see verbiage such as mine in many listings in the future. I’ve even been contacted by agents from others States stating that they too will be adding it to listings. It need not even be a Rule to add it to the listing agreement via Form 18.

  • http://brickandgarden.com/blog Reuben Moore

    Nick – As mwcreel has just explained, it is actually becoming more common for listing agents to vary commissions charged based on whether or not the buyer uses a buyer’s agent. This is simply the next logical step – varying commission based on the level of service the buyer’s agent provides. They still get a nominal amount (often 1% is more than nominal) for procuring the buyer. They just should not be paid for anything further.

    Attacking double-dipping agents is terribly convenient in this forum because it distracts from the real issue. Redfin wants payment without providing service. In any other business segment, this would be called: Theft.

  • http://brickandgarden.com/blog Reuben Moore

    Red Herring Real Estate….

    In fact, Redfin’s “Real Estate Consumer’s Bill of Rights” and their entire business model is a distraction from the real structural issues in the real estate businss. The Redfin goal is not to address the issues in our industry, but to simply take advantage of them.

    I propose we re-name them, “Red Herring Real Estate”.

  • Barbara Beley Taber

    From a consumer….would like to see inclusion or advisement of what a pre-purchase inspection does and does NOT cover and also the particular specialty of the individual inspector. X: an electrician may not pick up on structural defects, read on}
    Recently purchased a 1978 built house in S.CA for half a mil. We were prepared for {and feel qualified about} cosmetic remodeling. During first project–new roof–discovered that the framing was faulty and entire front wall was caving outward due to “stupid” framing and roof not properly supported. Inspector caught the electric problem ON the wall that is caving outward {a criple wall}, but no mention of the structural itself. First remodel contractor to look at house noticed it with first step inside the house.
    What provisions are there to protect or advise buyer of limits of individual inspector? We would never purchse another home without a good structural engineer consult. Having a weak wall in a neighbor- hood with a major faultline {in earth!} is NOT comforting!
    What was originally going to be cosmetic remodeling of a 1800 sq. ft. home is now upwards of $150K for structural plus cosmetic.

  • mwcreel

    The Inspectors are all licensed, but of course they have different backgrounds. It’s the buyer that selects an inspector and they should of course talk at length to him about his qualifications. Each inspector has an agreement for you to sign which you should read. In California, I would think a structural engineer would be a good choice to make. It’s not cheap, but not having one may cost much more.

  • mwcreel

    REGARDING RULE 101(F)

    I should clarify this is taken from the NWMLS Rules & Regulations book:

    Rule 101: Division of Commissions.

    Selling Member’s Share. In the case of a sale by a member of a listing turned in to NWMLS, the selling member’s share of the commission shall be paid as designated in the listing (or any change thereto). The actual selling member’s share must be in each listing, and must be expressed as a percentage of the sale price; provided, however, that where (and only where) the seller has expressed the entire commission as a flat dollar amount, the selling member’s share of the commission may also be designated as a dollar amount. Unless otherwise disclosed in the “Remarks” section, selling member shall be entitled to receive the selling member’s share of the commission whether the selling member represents the seller, buyer, seller and buyer, or neither party.

    When Change Effective. As between members, a change in the selling member’s share of a commission shall be effective when published in NWMLS’s on-line database system.

    Vague Split Designations Prohibited. The terms “reciprocal,” “negotiable,” or “as on file” and similar vague or uncertain references are prohibited.

    Consent Required to Change Other Member’s Commission. A member may not reduce, defer, or take property in lieu of the other member’s share of a commission without the other member’s written permission.

    No Discrimination Between Members. The selling member’s share established on a listing shall apply uniformly to all members of NWMLS. No member may offer different selling member’s share to different members on the same listing.

    Variable Selling Office Commission and Other Restrictions on Selling Member’s Right to Cooperation and Compensation Permitted Only if Timely Disclosed. No restriction (such as “site registration,” or a variable selling office commission) on the right of a selling member to receive cooperation and compensation from the listing member, shall be imposed by the listing office unless the listing has been denoted as such both in the listing and on the On-Line System as required by NWMLS and either (1) terms of the restriction are fully disclosed in the Remarks Section; or (2) a full description of the restriction is provided to NWMLS for access by the membership on the Fax-On-Demand System or such other means as NWMLS may select from time to time.

    This can be viewed on their web site, and is not a National Association of Realtors rule as Nick suggested.

  • Nick Davis

    Let me establish this fact: I do not work for Redfin. I am, however, a buyer?s agent who regularly rebates commission. Therefore, I can speak with certitude on what traditional agents do to create a cloud of suspicion toward the rebate model. Listing agents tell my clients that rebates are illegal, a scam, a ploy and/or any other denigrating term to cause the buyer to not seek out a rebate. In many cases, an established brokerage relationship is already in place with the client and listing agents are interfering by creating a cloud of suspicion — a possible antitrust issue. These agents have no respect or regard for an established buyer-brokerage engagement. A buyer has a right to shop around without the buyer?s agent by his/her side at every moment. I suggest you guys clean up your act first.

  • http://brickandgarden.com/blog Reuben Moore

    Nick, I could not care less if you choose to rebate to your buyer clients, or not – Just don’t expect me to do your job.

    Pointing out flaws in some listing agents practices is fine. But it hardly justifies the Red Herring Model….

  • http://www.briorealty.com Patrick M. Flynn, DB Brio Realty

    Regarding Mr. Davis’ rebut to mscreel’s post about Rule 101 of the NWMLS. I drafted this verbiage for all my agents to use for all buyers agents and agencies that do not or will not do their job. All my agents attach this verbiage to our listings to insure that every single working buyer agent…or even the non-working buyers agents at Redfin…take their craft seriously and handle every aspect of the transaction.
    Mr. Creel also mentions his own rebate system which I have no problem with but Mr. Creel and all my agents get it pounded into their heads that Brio Realty is a FULL SERVICE REAL ESTATE BROKERAGE and as such will facilitate, negotiate and advise their buyers from beginning to end!
    Finally, Mr. Davis, I challenge you to find a single hard working, reputable listing agent that pockets the selling office commission when this rule is invoked! In my case, as is the case with every hard working listing agent I know, it (the SOC unearned by the buyers agent) always goes back to the seller who pays the commission…I guess, sorta like a rebate…would you know anything about giving money back to the client Mr. Davis?

  • mwcreel

    Clean up whose act? I just told you I do give rebates, all the time. I’ve never told anyone they’re illegal, nor have I been told by a client that someone told them they are illegal. It does absolutely matter how the “rebate” is given. You can’t just slide someone cash under the table after closing, which is often what people expect you to do.

    It has to be on a addendum signed by the Buyer and Seller and approved by the lender. To fail to do that is illegal (violates lending disclosure laws), so perhaps that’s what these people you refer to were told. You shouldn’t jump to extreme conclusions. The agents I know that don’t give rebates simply tell their clients that they earn their pay and have a right to keep it.

    There is no obligation to give a client a percentage of your paycheck. I’ve never bought a car and had the salesman cut me a check to rebate half his commission. Only Realty Agents seem to be expected to do this.

    I do it to help people buy a home, not because I have to. As I’ve said a dozen times, for all I care you and Redfin can hand over your full commission to anyone you want. Redfin just needs to make sure they earned it and didn’t push their responsibilities off on the seller’s agent.

    That’s it, end of story. My act is clean Nick, so are a majority of agents. Don’t tarnish our image because you met a few swindlers in your day. We all have.

  • Tim

    I find it fascinating reading every one of these comments.

    Would anyone like to guess how many agents our escrow office has worked with where transaction management/representation by a selling agent or listing agent was either

    a)sub par
    b)negligent in a major way
    c)non-existent

    The answer is far too many. And these folks were from those who beat the drum of “full service companies.”

    99% of all our transactions are with full-service brokers. Obviously, you can guess as to why the discussion is fascinating.

    I would love our office to close a transaction with Redfin if the time arises– just to see if there is some difference in transaction management or to hear the comments good or bad from their clients perspective. Would be interesting.

  • mwcreel

    Well, perhaps they will be in businness long enough for your dream to be satisfied.

  • Realty_Pro

    Search Legal Hotline Results

    Topic: Compensation/Commission

    Question:
    A buyer agent has agreed to rebate a certain part of her co-op fee to the buyer. Must she disclose this to the seller?

    Answer:
    No. This is your fee arrangement with your client, and it is confidential to your client.

    http://www.varealtor.org/memberservices/questions_results_view.asp?questionid=94

  • Question

    Well, that presents a conundrum. If seller disclosure isn?t required, then the rebate apparently isn?t required to be recorded on the HUD???

  • Agent

    All money changing hands must be disclosed.

  • Question

    1. When a Real Estate Broker pays a referral fee from the commission, is that recorded on the HUD?

    2. When a Real Estate Broker pays his/her associates (agents), is that recorded on the HUD?

    3. When a Builder (seller) pays multiple fees to many parties to have a home built, is that recorded on the HUD?

  • Realty_Pro

    Maryland REC ”

    Rebates/Cash Payments. Section 17-604 provides that a licensee may not pay compensation in any form for the provision of real estate brokerage services to an individual who is not licensed. A person who is simply a party to a real estate transaction is not providing real estate brokerage services within the definitions in Section 17-101, and therefore may receive monies from a licensee. If the monies are used to pay settlement charges, that should be reflected on the HUD-1 form.

    The agreement to pay compensation to a buyer in the form of a rebate of commission, or to compensate the seller either through a cash payment or a reduction of the commission rate must be in writing as required by the Code of Ethics, COMAR 09.11.02.01H. The Real Estate Commission has also taken the position that financial payments by a licensee to a party should be disclosed to the other party to the transaction, even if they are not required to be recorded on the HUD-1 form.”

  • anonymous

    how about the closing sale price for all MLS-listed properties? we sellers won’t have real rights until we have as much information as the agents.

  • Question

    So, in Virginia disclosure to the seller isn?t required, but it is required in Maryland. I guess it varies from State-to-State. However, according to my understanding of the aforementioned verbiage from the MREC, apparently only rebate money used for the closing is required to be on the HUD.

  • 007

    If you want to know the same information as an agent, go to a real estate school and purchase the text book. Most will sell it without taking the class. In Washington the class is only about $350, so if your buying a lot of realty, take the class. I know a few mortgage people that have taken it just to learn more about what goes into a deal on our end.

  • Ben Levante

    The problem here is that Redfin thinks it is a dot com. Wave tha magic VC wand and let’s pretend.

    Still a brokerage.

    The CEO is a dot com entrepreneur not someone with a real estate brokerage, mortgage or even construction background.

    Plus Redfin has a CTO! I’ve never seen a start-up brokerage with a CTO.

    While that sounds so Web 2.0, not quite sure how that really adds anything other than overhead to what is a transactional business.

    Unless, transactions coordination jobs will be offshored soon…that will be interesting.

    As another poster commented, this Bill of Rights is rather self-serving and makes for a great marketing ploy.

    What is clear is that bright people apparently capitalized this venture that believed in the CEO and had little understanding of real estate – highly regulated industry.

    No matter how much Redin pretends, a real estate brokerage is not a dot com.

    When does Redfin expect to breakeven?

  • http://brickandgarden.com/blog Reuben Moore

    >how about the closing sale price for all MLS-listed properties? we sellers won’t have real rights until we have as much information as the agents.

    Well, I cannot speak for other states, but in North Carolina, this information is publicly available. While access to the data varies by county, many counties, including my own, make this data available on the internet.

    As a firm, we also pay an appraisal firm for consolidated sales data in our market. And, you know what? They will sell that data to anyone who pays the subscription fee. Anyone.

    It’s called a tool. I can’t think of one business that does not use industry-specific tools and data – Most often bought and paid for.

    Quit whining about “rights”. If you want the information put a little time and effort and money into it – just like I did…..

  • JD Blackwell

    Make a good living on 1%? Surely you don’t know the “industry” works. With a median price of $360,000 in my part of the world it would take 14 transactions at 1% just to reach threshold (company dollar, broker’s split, call it what you will). That’s 14 transactions where you’ve made a grand total of $25,000. Assuming generously that a good agent may get an additional 10 transactions that he wont have to share with his broker, he’s *grossed* $61,000 before he’s paid for all the costs of doing business. Business expenses typically run $25,000+ a year leaving $36,000 before Uncle Sam takes his bite. The reality is that the typical agent in NWMLS’s pool of 28,000 agents scratched for his share of the 110,000 transactions that happened last year (that’s about 4 transactions a year for the statistically challenged among us). You may well ask why there are so many agents swimming in such a small pool and the answer is twofold. First, it’s way too easy to get a license. Any 18 year old high school dropout can take 60 clock hours of online training and hang his license. And you wonder why “mwcreel” says that “far too many agents are a)sub par b)negligent in a major way c)non-existent? There thousands of soccer moms and hobby agents dabbling in real estate while the kids are in school or after work. Escrow officers see it every day; I wind up on the other side of the transaction from these folks way too often myself. The cure is to raise the bar much higher. A hairdresser needs 2000 clock hours for a license, a barber 1000, a massage therapist 750. 60 clock hours is nowhere near enough for the kind of responsibility agents are *supposed* to have.

    The second interlocking issue is that the motivation of the consumer side of the profession, the agent is not consistent with the what drives the “industry” (brokers, NAR, MLS and real estate schools). The greed factor drives brokers to bring in more agents so that only a few reach threshold. You don’t think the statistical average of 4 transactions per agent a year is accindental do you? It coincidently happens to be the number of median transactions at a 50% split it takes to reach threshold in this area. NAR, MLS and the schools obviously have a stake in having more agents in the pool because agents pay a lot in fees.

    The cure is fewer, more highly qualified agents. Whether that comes from more clock hours, higher levels of formal education, relevant experience or any combination matters not to me. The bar needs to be high enough to keep out part-timers and incompetents. Since this is a regulated profession changing state law to prohibit requiring individual agents to join the Realtors seems appropriate. Perhaps then they’d more responsive to the needs of the folks in the trenches who pay the freight instead of watching out for the “industry”. The MLS, long the exclusive domain of “member brokers” needs to be more of a cooperative with *all* members involved in the ownership and governance of the organization.

    I can easily visualize how such changes could create an environment where agents could provide benchmark full service at a commission far below the traditional 6% and still make an honest comfortable living.

  • B. Dunsworth

    While I agree that the threshold should be raised to preclude incompetent agents from entering the field, I disagree that a 1% transaction can?t be successful. The amount of the rebate given to the buyer should be based on the amount of legwork necessary to close the transaction — 2%, 1% respectively. A buyer who is seeking a rebate should also be prepared to pay a ?retainer fee? — say $1,000. If the buyer wastes your time, you are still compensated. If the buyer closes, then you can deduct the retainer fee at settlement.

  • JD Blackwell

    Mr. Dunsworth, if you were a real estate agent I’m sure you’d be understand why a 1% full service transaction is nearly impossible. At the current median selling price of $360,000 and doing 36 transactions a year there isn’t enough money left over from paying the cost of doing business to make it worthwhile. As business goes RE is about the cheapest to get started in but sustaining the overhead is more than you might think. Overhauling the system would definitely result in better agents and more reasonable commissions but a 1% full service transaction is a parsimonious fantasy unlikely to ever become reality.

  • B. Dunsworth

    I am an agent. Just wrote a contract where the buyer shopped for his own new home and he will be receiving a 2% rebate against settlement charges. The buyer was educated at the beginning to always identify that he has a buyer?s agent. He went around to the different model homes (shopping) to see what he liked and then contacted me when he was ready. The house is price over $600K and that will leave me $6K to handle his transaction. The buyer did the leg work and he is saving over 12K. Of course, if would have he needed me to show the homes, then a retainer fee would have been collected.

  • JD Blackwell

    How do get around the state law that says real estate commissions can only be paid to licensed agents. I think you’re jeopardizing your license.

  • B. Dunsworth

    Real estate commissions are negotiable. All but about 11 states disallow rebates.

  • B. Dunsworth

    Correction: Only about 11 states disallow rebates.

  • JD Blackwell

    I’m a Washington agent and the law here prohibits any form of compensation to non-agents. I think Redfin may be treading on thin ice with their business model.

  • B. Dunsworth

    Not really. The FTC/USDOJ protect rebates through anti-trust laws. The United States Department Of Justice (USDOJ) is fighting for Real Estate Consumers all across the country. Here is a recent ruling on the issue: http://www.usdoj.gov/atr/public/press_releases/2005/210058.htm

  • JD Blackwell

    Sounds to me that cure for that is to run listings at a 1% SOC and give full service selling agents a referral fee. Certainly if DOJ can bless rebates it wouldn’t be much of stretch to apply the same logic to that.

  • B. Dunsworth

    A cure? If you cut out the 3% co-op fee, then what agent will sell your listings?

    What an agent does with his/her co-op fee is between the buyer’s agent and his/her client. It?s no different than you charging a lower listing fee to your seller. It?s all negotiable.

  • JD Blackwell

    Do you really think a buyer’s agent is an airtight gatekeeper to whether a listing gets sold? After you tell your client you won’t show it they come to me. If you do show it and you’re a full service buyer’s agent you get the 1% per the listing and I give you a referral fee for the balance. If you’re a limited/no service agent who’s making me do all the heavy lifting in the transaction you get 1%…period. You see, there’s no regulation that requires listing agents to split the total commission negotiated between him and the seller. The SOC is completely arbitrary and can even change during the listing. The buyer’s agent has no right to know what the total commission is much less to assume that that the SOC is going to be 3%. If I have a desirable listing that I know my marketing skills will have buyers tripping over themselves to buy, why ever should I give you half? The trouble with your model is that you assume you’re entitled to more. If the value of your service is so marginal that you can justify giving 2/3 of your commission to your buyer then you’ve already demonstrated wimpy negotiating skills and likely will be a creampuff during negotiations. In my book “buying” buyers by offering rebates is as tacky and unprofessional as the practice of “buying” listings.

  • B. Dunsworth

    If you disclosed said fact to your seller, you can do what you want. It?s a free market. However, most sellers would not list with you if you tell them that you won?t show their home to a buyer who is using a limited-service buyer?s broker. The seller merely wants their home sold and you are being hired to do just that. Period. By not showing the home, you too are a limited-service listing agent.

    Cheers!

  • JD Blackwell

    Where did you get that I wouldn’t show the house? I’ll show it all day long, it’s just that with a 1% SOC, it keeps me from having to deal with agents who expect a commission without ever getting in their car. You know good and well that you won’t send a client to a listing with a 1% SOC, will you? Like I said before, if they found it on the ‘net and they want to see it, either you’ll show it or they’ll find a full service agent who will or they’ll come straight to the listing agent. When I show *your* clients the home, they’ll get an agency pamphlet and a form 42 because at that point *I* am providing real estate services to them. The bottom line is this; the SOC isn’t in the buyer’s agent’s control. The SOC on the listing is just the *minimum* I have to give you. I can always write the commission disbursement to give a full service buyer’s agent more.

  • B. Dunsworth

    Once again, if you disclose said fact to your seller, you can do what you want. It?s a free market! Set your own fee! Have your own business model!

    Good luck!

  • http://brickandgarden.com/blog Reuben Moore

    Consumer protection, Redfin style:

    Redfin tells their buyers to contact the listing agent to view properties. If the listing agent is uncooperative, Redfin threatens to simply bypass the listing agent and go directly to the seller. Redfin’s thinking is that the listing agent is not going to like this because the seller hired the listing agent to sell the property and they will be hopping mad when they (the seller) discovers that the listing agent is refusing to show their property.

    I wonder what is going to happen when Redfin inevitably encounters a listing agent/firm that offers the same type of consumer protection to the seller.

    Buyer: Hi, we’d like to see your listing at 101 Main Street.

    Listing Agent: Hey, that’s Great! Are you working with an agent?

    Buyer: Yes, we hired Redfin to represent us as our buyer’s agent.

    Listing Agent: Excellent! All of our properties are MLS listed, and as MLS members, Redfin can show it to you.

    Buyer: But that is not the way Redfin works, we need you to show it to us.

    Listing Agent: Nah, my own clients keep me pretty busy. And besides, the game’s about to start.

    Buyer: Hello, Mr. Seller? I am a potential buyer interested in seeing your property for sale.

    Seller: Great! Call my listing agent.

    Buyer: You know, I did that. And, he would not show it to me! Can you believe that?

    Seller: Well…are, you already working with a real estate agent?

    Buyer: Yes, we are working with Redfin.

    Seller: Well, I am not familiar with that firm, but no doubt, they would be delighted to show you the property.

    Buyer: Well, no Mr. Seller, that is not how Redfin works. You see, when we use Redfin, the listing agent or the seller must show us the property.

    Seller: I see, well I hired a real estate agent to sell my property because I don’t have time to deal with it myself. That’s the whole reason I agreed to pay them a commission.

    Buyer: Well exactly! And, can you believe that that listing agent you hired is not willing to do what you are paying them for?!?

    Seller: How’s that?

    Buyer: Well, he won’t show me the property!

    Seller: You know, as I recall, the majority of the real estate commission I am paying is actually turned over to the buyer’s agent.

    Buyer: Well, you see, Redfin rebates two-thirds of their commission to me, as the buyer.

    Seller: Well, okay, I guess. I mean, I really do not care what they do with the commission so long as my property gets sold. Nevertheless, I am paying them to show the property.

    Buyer: Actually, Mr. Seller, as the buyer, I am the only person bringing money to this transaction.

    Seller: That may be true, but as the seller, I am accepting a net less than the market value of the property in order to fund these two real estate agents. So you might say that we are each paying our share, maybe? But okay, for the sake of argument, YOU are paying the buyer’s agent to show you the property. So, get them to show it to you….

    Buyer: Well, not really, because they are rebating the money back to me.

    Seller: So, you are NOT paying them to show you the property?

    Buyer: Right!

    Seller: Well then, who exactly are you paying to show you the property?

    Buyer: Ah, I guess, no one.

    Seller: Have a nice day….

  • http://brickandgarden.com/blog Reuben Moore

    Consumer protection, Redfin style:

    Redfin tells their buyers to contact the listing agent to view properties. If the listing agent is uncooperative, Redfin threatens to simply bypass the listing agent and go directly to the seller. Redfin’s thinking is that the listing agent is not going to like this because the seller hired the listing agent to sell the property and they will be hopping mad when they (the seller) discovers that the listing agent is refusing to show their property.

    I wonder what is going to happen when Redfin inevitably encounters a listing agent/firm that offers the same type of consumer protection to the seller.

    Buyer: Hi, we’d like to see your listing at 101 Main Street.

    Listing Agent: Hey, that’s Great! Are you working with an agent?

    Buyer: Yes, we hired Redfin to represent us as our buyer’s agent.

    Listing Agent: Excellent! All of our properties are MLS listed, and as MLS members, Redfin can show it to you.

    Buyer: But that is not the way Redfin works, we need you to show it to us.

    Listing Agent: Nah, my own clients keep me pretty busy. And besides, the game’s about to start.

    Buyer: Hello, Mr. Seller? I am a potential buyer interested in seeing your property for sale.

    Seller: Great! Call my listing agent.

    Buyer: You know, I did that. And, he would not show it to me! Can you believe that?

    Seller: Well…are, you already working with a real estate agent?

    Buyer: Yes, we are working with Redfin.

    Seller: Well, I am not familiar with that firm, but no doubt, they would be delighted to show you the property.

    Buyer: Well, no Mr. Seller, that is not how Redfin works. You see, when we use Redfin, the listing agent or the seller must show us the property.

    Seller: I see, well I hired a real estate agent to sell my property because I don’t have time to deal with it myself. That’s the whole reason I agreed to pay them a commission.

    Buyer: Well exactly! And, can you believe that that listing agent you hired is not willing to do what you are paying them for?!?

    Seller: How’s that?

    Buyer: Well, he won’t show me the property!

    Seller: You know, as I recall, the majority of the real estate commission I am paying is actually turned over to the buyer’s agent.

    Buyer: Well, you see, Redfin rebates two-thirds of their commission to me, as the buyer.

    Seller: Well, okay, I guess. I mean, I really do not care what they do with the commission so long as my property gets sold. Nevertheless, I am paying them to show the property.

    Buyer: Actually, Mr. Seller, as the buyer, I am the only person bringing money to this transaction.

    Seller: That may be true, but as the seller, I am accepting a net less than the market value of the property in order to fund these two real estate agents. So you might say that we are each paying our share, maybe? But okay, for the sake of argument, YOU are paying the buyer’s agent to show you the property. So, get them to show it to you….

    Buyer: Well, not really, because they are rebating the money back to me.

    Seller: So, you are NOT paying them to show you the property?

    Buyer: Right!

    Seller: Well then, who exactly are you paying to show you the property?

    Buyer: Ah, I guess, no one.

    Seller: Have a nice day….

  • http://brickandgarden.com/blog Reuben Moore

    Part Two:

    Redfin Agent: Mr. Seller, we have a buyer who would like to see your property.

    Seller: Well why are you calling me? After all, I did hire a real estate agent to deal with this.

    Redfin Agent: I understand, Mr. Seller, but do you know, he is refusing to show your property to our buyer. So, would you mind showing it yourself?

    Seller: Well, I am out of the country, on my second honeymoon. I will be back in three weeks. But then, I am off to NYC for a week on business.

    Redfin Agent: Well, that?s really too too bad. You know, our buyer might just take their $500,000 and go buy some other property?.

    Seller: Well geez, let me call my agent?.

    Seller: Mr. Listing Agent, sorry to bother you, I know the game?s on?.

    B&G Listing Agent: Don?t be silly, Mr. Client, it?s just a game. How can I help you today?

    Seller: Well, some outfit called Redfin called and they want you to show my property to their buyer.

    B&G Listing Agent: Hmmm

    Seller: If not, they said their buyer might just go buy some other property. Now, Mr. Listing Agent, you know how badly I need to get this property sold, right?

    B&G Listing Agent: Yes, Mr. Client, I do. But let me ask you, do you remember when you gave me the listing on this property, the breakout of expenses that I gave you?

    Seller: Yes, of course.

    B&G Listing Agent: And, do you remember that since we are cooperating with buyer?s agents, we are offering a hefty buy-side payout?

    Seller: Yes, I do – $15,000, if I remember correctly.

    B&G Listing Agent: And, isn?t that quite a bit more than you are paying me, as the listing agent?

    Seller: Yes, absolutely.

    B&G Listing Agent: So, for $15,000, don?t you think the buyer?s agent can show the property?

    Seller: Well, I see your point. But that nice Mr. Kelman from Redfin explained that they rebate two-thirds of their fee to the buyer?.so, they are making a lot less.

    B&G Listing Agent: Well, Mr. Client, that is an arrangement between Redfin and their client, the buyer ? what does that have to do with us? In fact, how is it relevant at all? They contract to do a job and they are paid for it. What they do with their money is their own business, right?

    Seller: Well, Mr. Kelman explained that since the buyer is getting a rebate, he might be more willing to meet my price. That Mr. Kelman is so very nice.

    B&G Listing Agent: Yes, he is, in a Ken Lay sort of way. And no doubt, you told him that since your listing agent was making less than you were paying the buyer?s agent, that you might be more willing to accept their offer.

    Seller: It is sort of the same, isn?t it? Okay, but now what about losing their buyer to another property?

    B&G Listing Agent: Well, you know $500,000 is a lot of money. And any serious buyer is going to want to see all available properties before spending that kind of money. My guess is, if they really are serious they will get their agent to show them your property. If not, I do question how serious they are?.

    Seller: Well, how can you be sure?

    B&G Listing Agent: Look, if they can spend $500,000 on a property, they can surely pay their buyer?s agent ? no wait, you are paying their buyer?s agent, right?

    Seller: I see your point. Enjoy the rest of the game?.

  • Jim Bob

    Redfin actually isn’t a new idea.

    There are many “traditional” real estate agents who already discount their services and offer rebates. And they do so without stooping to bash other real estate agents, infer that they are greedy, less than honest or “screwed up”.

    Using the Redfin model, to list a home for sale for $300,000, the seller is still paying 4%. It’s no secret that commissions are negotiable and most sellers do just that. The savings aren’t all that much, especially compared with the limited service Redfin provides.

    And there are many excellent websites to search for listed homes.

    Are they really the “first” internet brokerage? What about eRealty?

    The reason the NAR was created in the early 20th century, was to protect the consumer. Prior to that, real estate brokerage was totally unregulated. Now there are state laws in place to protect the consumer and Real Estate Boards whom license individuals that practice real estate sales. Members of these boards include average citizens.

    So the NAR isn’t guilty of fixing anything. The Real Estate Board of each state is charged with regulating it’s licensees.

    Redfin really isn’t so much reinventing anything as they are pandering to popular hatred of real estate agents due to misunderstandings by some of the public. In fact they may be turning back the clock on consumers under the guise of savvy internet smoke and mirrors.

    I find it particularly frightening that the CEO proudly claims to have started a petition to get one of his teachers fired. Somebody so overtly vindictive is not the type of individual I would want running a large people oriented business.

    Is his motive really to help consumers or actually a general hatred of realtors for some hidden reason? Reading information on the Redfin website and listening to the CEO’s interview it seems like very thinly veiled hatred indeed.

    Does Redfin always show their listings to all the buyer clients of other real estate brokerages? I think all Real Estate agents should insist on it.

    The buying and selling of a home is an emotional experience. One that for most people, can’t be performed totally online.

    The public is intelligent enough to see that Redfin is really a not so subtle grab at real estate commissions. I could be wrong, but Redfin is just another flash in the frying pan.

  • Don Moore

    Hi there! It’s me again. No body wants to answer my question… In my state, and in California too, (CCC 2079) State rules require the licensee providing brokerage services to at a minimum: 1.) inspect the property and 2.) disclose material adverse facts prior to writing an offer. My understanding of your model is that your agents do not typically inspect the properties that they provide brokerage services, is that correct? Does WA and MA allow this? I know it wouldn’t fly here in my state. Unless your agents were also attorneys which exempts them from this requirement but then excludes them from obtaining an MLS-offered brokerage commission since they are not acting as a broker, but an attorney. Am I still missing something here?

    TIA

    Donald J. Moore

  • http://www.sixhrs.com Jack Payne

    I can’t fathom how refunding a commision can be forbidden in 11 states.

    In whatother fields doessuch
    nonsenseprevail? –Jack Payne
    http://www.sixhrs.com

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    can have the latest realesate property oriented news from this site

  • NHGranite

    Stop Whining! Here’s an easy fix: sellers pay their listing agent, buyers pay their selling agent. Since Buyer Agency took hold in the 90′s there is no “sub-agency”, no “cooperation” in most states. The buyer’s agent has to count on the one who hired him for the paycheck – what a concept! Imagine telling the buyer up front: “No, you pay me” and get away with doing nothing. A seller could still offer to pay the discount buyer agent’s fee, which is what, 1% when the rebate is given to the buyers? And this avoids the issue of paying rebates – the buyer benefits without having to get an illegal rebate if they use a discount broker.
    Ya get what ya pay for!

  • http://index1.fumuni.com Vilyamko
  • amy klein

    Your petition is rediculous, and quite frankly insulting to Real Estate Agents. Many agents care about their clients, and they are entitled to earn a living. Your misinformation and nastiness towards agents is irresponsible and terrible business practices. You’ll be out of business soon. Nobody wants a vengful organization representing them.

  • amy klein

    Your petition is rediculous, and quite frankly insulting to Real Estate Agents. Many agents care about their clients, and they are entitled to earn a living. Your misinformation and nastiness towards agents is irresponsible and terrible business practices. You’ll be out of business soon. Nobody wants a mean spirited organization representing them.

  • SKblog

    In a time that is getting tougher for real estate agents, it is clear you are trying to get more business for yourself. By blasting Realtors as a whole, shows your lack of integrity. A good Real Esate Agency is successful by doing a good job for their cleints, being ethical and following a fiduciary responsibilty. Success is not created by knocking people down to make your service attractive. A clever consumer, and an ethical consumer wouldn’t want to work with an organization like yours. And clients that are interested in what you have to say are the kind of people many Realtors wouldn’t want to work with. So, good luck with the kind of people who are interested in your kind of business tactics.

  • http://www.teambenya.com Jonathan

    It’s a matter of volume in order for this business model to work, and although I have nothing against competing business models, I think it’s sad that an article like this is written under some sort of assumption that these “points” are not/were not attended to in the interest of consumers by traditional real estate business models. Let’s compare apples to apples here, not create vaguely accusatory insinuation in the interest of trying to drum up business.

  • felilcia waters

    Who protects the buyer when the agents fails to do his job. The job meaning the closing list of items to be completed. I went to the broker because the agent kept avoiding me the broker said that he would get ahold of the agent because it needed to be handle now. After two more weeks with no return calls the broker said the agent has given notice and theres nothing he can do.

  • http://www.FlatFeeDirect.com Terry Shortt

    Great job! Since the real estate industry is about ten years behind (along with home loan processing) the rest of the service sector though, it may be a few years before these really become “rights” of consumers.

    I wonder what a “consumers bill of rights” might look today if developed by the NAR.

    Anti-consumer features like dual agency, minimum service requirements, anti-rebate laws, blocking alternative business models, MLS residency requirements, consumers’ unrepresented on real estate regulatory bodies and more would be very hard to justify if consumers could see how the back office really works.

  • Debra Proto

    I would like this bill of rights for consumers to include a couple more things. One that a broker can not get and exclusive right to sell from a seller when the broker is going to be the buyer. And here in Arkansas, realtors game the MLS system. In our case a broker signed a contract to buy a house from an elderly couple but he told them that he would only purchase it if they signed an exclusive right to sell. They signed. Another buyer came along and the broker sold it to them, prior to closing. he did not honor the exclusive right to sell by forwarding all offers to the elder couple. He then waited 15 days before putting his purchase of the property in the MLS. So that when my agent looked for comps this one did not show up. He flipped this property within 15 days. Got his bonus points for “platnum winnter” gamed the MLS system by having to MLSs for the same property in the system at overlapping time frames. How did he do this – he enter the address on one by A-1 and another 1-A and the MLS system bought it. This same broker has done this an additional five times since it happened to us.

  • http://www.shortsaleway.com/real-estate-consulting.html Real estate consulting

    Really great post. Most people do not take the time to understand the process before working with an agent. The more the consumer is educated the better it is for everyone involved.

  • http://wso2.org/wiki/display/~natefern Bill Bartmann

    Excellent site, keep up the good work